Many business owner-managers tend to view their accountants as providers of annual accounts, and maybe monthly management figures as well.
However David Meredith, senior partner in Tenterden-based accountants Busbys, says that a good accountant should advise clients “from cradle to grave”, from business start-up through growth, maturity and eventual sale, taking into consideration pensions, retirement planning and the next generation.
In a recent presentation to members of the Wealden Business Group, David said that many new businesses were in a rush to establish limited liability as soon as possible, when this was not particularly necessary until annual profits reached £30,000 or more. There are other business structures to consider (although he felt that LLP status was “the worst of both worlds”).
He reviewed the various methods of withdrawing money from a business, from salaries and expenses to dividends and rent, as well as covering motoring costs and interest on loans to the company.
David said there was good news for those considering selling up, as companies and entrepreneurs were now actively seeking purchases, mergers, joint ventures or partnerships.
While most business buyers took a multiplier of net profits averaged over three years in determining what price to offer, it could also depend on the state of the general economy and other factors.
He said that building value prior to sale was crucial, and that an exit plan could take up to three years to achieve. He warned against owner managers over-estimating the value of their business, particularly if they are personally crucial to its operation and success.
To contact David Meredith tel: 01580 765088 or email firstname.lastname@example.org.